Consumer lending and risk diversification: The potential market for credit securitisation and credit derivatives in Nigeria

Nigeria is inadvertently developing a tradeable underlying asset in credit obligations. The Central Bank of Nigeria (CBN)’s drive to push bank loans to the real sector, along with different investment initiatives by state governments and other alternative financiers to advance debt to individuals and businesses in Nigeria, has expanded the portfolio of private debt and has made debt and credit of growing significance to the Nigerian economy. These increased lending requirements and activities will result in an increase in banks’ credit exposure to different sectors of the Nigerian economy, from payday loans to small-scale retail and the micro, small and medium enterprise services industry.